Sub prime crisis could moderate exports demand from India: FM

PTI|

Nov 23, 2007, 03.47 PM IST

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NEW DELHI: Noting that India largely remains unaffected by the global turbulence in financial markets due to US sub-prime crisis, Finance Minister P Chidambaram on Friday said that there could be however some moderation in exports demand.

He also expressed the hope that the country would manage the massive capital inflows that has resulted in rupee appreciating by over 10 per cent this year, hurting the interests of exporters.

"The fall of this (sub prime) crisis is that there could be some moderation in exports demand from India," Finance Minister P Chidambaram said at a CII function held to welcome Iceland business delegation here.

The Finance Minister said said fortunately India remains largely insulated from the global turbulence caused by US sub-prime mortgage crisis.

"We cannot afford shocks and major turbulences in our markets, so we are cautious and calibrated in opening up the capital and financial markets. But we have set the course to open up our markets," he added.

On massive capital flow into the country, the Finance Minister said, "In the last few months, we had to cope with the rush of capital inflows in India. We are confident that we will gain mastery in this aspect."

Huge capital inflow has pushed up the rupee by over 10 per cent this year, hurting exporters. The export growth has more than halved since last year. Exports for April-September period this year increased to $72.28 billion from $60.98 billion in the same months last year, showing a growth of 18.52 per cent.

Further, reflecting a squeeze in the margins for exporters, the export growth in rupee terms was only 4.31 per cent in September this year.